What Is a Business Continuity Plan (BCP)?

What Is a Business Continuity Plan (BCP)?

Let me explain what a Business Continuity Plan, or BCP, really is. It's essentially a system designed for prevention and recovery from potential threats to your company. This plan makes sure that your personnel and assets are protected and can get back to functioning quickly if a disaster hits. You need to design BCPs to safeguard your employees and assets so they can resume business operations whenever a disruption occurs. And remember, you have to test these plans before any emergency to ensure they work and to spot and fix any weaknesses.

Key Takeaways

Here's what you should take away from this: Business continuity plans act as prevention and recovery systems against potential threats like natural disasters or cyber-attacks. They're built to protect your personnel and assets, ensuring they can operate swiftly when disaster strikes. Make sure you test your BCPs to confirm there are no weaknesses that need identifying and correcting.

Understanding Business Continuity Plans (BCPs)

BCPs are a crucial part of any business you run. Threats, disruptions, or halts in your business activities, even for a short time, lead to losses, higher costs, and the challenge of restarting. This can cause a drop in profitability, financial setbacks, and even bankruptcy or liquidation in severe cases.

Your goal with a BCP is to get the business back on track with minimal interruption. It involves defining all risks that could impact your company's operations, which makes it a key element of your risk management strategy. These risks might include natural disasters like fires, floods, weather events, or pandemics, as well as acts of terrorism or cyber-attacks. Once you've identified the risks, your plan should cover determining how they affect operations, implementing safeguards and procedures to mitigate them, testing those procedures to ensure they work, and reviewing the process to keep it up to date.

You can't just rely on insurance because it doesn't cover all costs or the customers who might switch to competitors. That's why you should develop your BCP in advance, involving input from key stakeholders and personnel.

Fast Fact

Keep this in mind: Business impact analysis, recovery, organization, and training are all essential steps you need to follow when creating a Business Continuity Plan.

Benefits of a Business Continuity Plan

Your business faces a range of disasters, from minor issues to catastrophic events. Business continuity planning is meant to help you keep operating even during major disasters like fires. Note that BCPs differ from disaster recovery plans, which specifically focus on recovering your company's IT systems after a crisis.

Take, for example, a finance company in a major city. It might implement a BCP by backing up computer and client files offsite. If something happens to the main office, satellite offices can still access critical information.

An important note: A BCP might not be fully effective if a large population is affected, like in a disease outbreak. Still, BCPs enhance risk management by preventing disruptions from spreading and can reduce downtime for networks or technology, ultimately saving your company money.

How To Create a Business Continuity Plan

There are several steps you must follow to develop a solid BCP. Start with a Business Impact Analysis, where you identify time-sensitive functions and related resources. Then move to Recovery, identifying and implementing steps to recover critical business functions. Next, create an Organization by forming a continuity team that will devise a plan to manage disruptions. Finally, ensure Training by educating and testing the continuity team, including exercises that review the plan and strategies.

You might also find it useful to create a checklist with key details like emergency contacts, resources for the continuity team, locations of backup data, and other important personnel.

Along with training the team, test the BCP itself multiple times to apply it to various risk scenarios. This helps identify and correct any weaknesses.

Important

For your BCP to succeed, all employees—even those not on the continuity team—must be aware of the plan.

Business Continuity Impact Analysis

A key part of developing your BCP is conducting a business continuity impact analysis. This identifies the effects of disruptions to business functions and processes and uses that information to decide on recovery priorities and strategies.

The Federal Emergency Management Agency (FEMA) offers an operational and financial impact worksheet to assist with this analysis. You should have business function and process managers, who know the business well, complete it. These worksheets summarize the financial and operational impacts from losing individual functions and processes, and they identify when such losses would trigger the identified impacts.

By completing this analysis, you can prioritize processes that most affect your business's financial and operational functions. The point at which recovery must occur is known as the recovery time objective.

Business Continuity Plan vs. Disaster Recovery Plan

BCPs and disaster recovery plans are similar, but the latter focuses solely on technology and IT infrastructure. BCPs are broader, covering the entire organization, including customer service and supply chain. They aim to reduce overall costs or losses.

Disaster recovery plans address technology downtimes and related costs, applied in cases like communication failures, power outages, or natural disasters. They typically involve only IT personnel who create and manage the policy. In contrast, BCPs involve more personnel trained on potential processes.

Why Is Business Continuity Plan (BCP) Important?

Your business is susceptible to disasters ranging from minor to catastrophic, making BCPs essential. They're designed to help you continue operating amid threats and disruptions, preventing revenue loss, higher costs, reduced profitability, and customer defection to competitors. Insurance alone isn't sufficient as it doesn't cover everything.

What Should a Business Continuity Plan (BCP) Include?

Your BCP should identify all risks affecting operations, determine their impact, and implement safeguards and procedures to mitigate them. Include testing to ensure these work, and a review process to keep the plan current.

What Is Business Continuity Impact Analysis?

This analysis identifies disruption effects on functions and processes, informing recovery priorities and strategies. FEMA's worksheet helps summarize financial and operational impacts from losses and when they occur.

The Bottom Line

Business continuity plans are created to accelerate your organization's recovery from threats or disasters. They establish mechanisms to minimize downtime for personnel and assets, covering all risks like floods or fires.